title insurance

Think about what this is saying. It says that 5% of the time, the title is messed up on a house such that the insurance company has to pay out to fix the problem. Are you willing to take a 5% risk that your $600K investment becomes worthless because it is learned that it is sitting 4 feet left of your property line?

You would be very risk tollerant if you pass up on title insurance.

-john-

The lender's policy insures only that the loan is in the first position. The insurance isn't just that you might not have title to the property. The owner's policy insures that you will have no loss due to unpaid taxes, or an undisclosed encroachment, or an undisclosed right of way, or . . . The possibility of loss is greater in those cases than that of the lender's policy. I can't speak to whether your purchase of the policy is a good financial decision, especially when I know nothing of the title company nor whether the title plant is well-maintained.

Elizabeth

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I think you need to double check the numbers. For Massachusetts for a $615K house Old Republic Title Insurance charges $1537.50 for lender policy only, $2244.75 for owner policy only , but only $2419.75 for simultaneous lender and owner policy. You will not save as much as you think with only a lender policy.

Title insurance needs serious reform. Here in PA the Commonwealth nails consumers by setting minimum prices for title insurance at high rates. Consumers would be better served if states set maximum price rates for title insurance, not minimum rates.

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Here's a scenario I thought was interesting, a prior estate tax bill that attached to the property, but which didn't see daylight until after the houses were sold. The holding in the case is on another issue, but I'm sure these owners were glad they bought title insurance - see First American v. USA:

-Tad

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Another concern involves identity theft. There has been a scam going on in British Columbia recently, whereby a criminal actually is able to take out a mortgage on a house without the homeowner's knowledge. Later, the homeowner has to go through a costly legal process to regain possession of the house. As it has played out, nobody has lost their house, but, believe it or not, some courts have actually held that the homeowner is responsible for repayment of the bogus mortgage! At any rate, financial advisors in these parts are stressing the importance of getting title insurance as protection from this kind of fraud. Whether anything like this could be an issue in the USA, I don't know.

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The payout rate doesn't matter. What matters is that you can withstand the loss if you self insure. The sellers may think they own the house, but are you sure there are no unrecorded liens, easements, or other title problems? Title searches only find recorded stuff.

There was a recent case on the news where a owner abandoned a property in the

80's. The city mowed the lawn and neglected to file a formal lien. HUD took over the property and sold it, supposedly delivering clear title. Now the city discovers the debt, which with interest and penalties has grown to $20,000.

HUD has no records showing that they paid the debt and the city threatened to evict the present owners. In the end, the city waved the debt, but still...

Exactly. You are buying protection. The question is not how much it is costing the title company, it is whether you afford to self insure. It is unlikely, but possible you could lose the whole $615K.

-- Doug

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I just spent 4 months cleaning up a title -- not on a home/personal residence, but on an office building we *thought* we owned for the last nine years. According to the official paperwork, we didn't own it.

Title search *was* already done to satisfy the lender.

Title company screwed up.

It took 4 months to clean up, and we lost a locked-in deal to sell it (it eventually sold after we cleaned up the mess).

The good news: We had an owner's policy. Had we not been able to obtain clear title, we would have been made whole by the insurance carrier.

***

5% of the time seems a small chance -- but it *does* happen and title SNAFUs are both time consuming and expensive to clean up.

Do yourself a favor: Buy the policy.

.

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Any exposure to court rulings giving back land to Indians?

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No feedback on how this might be handled, if your house sits on land granted by a treaty now in question? I thought a number of years ago there were attempts at legal reperations or repatriation of Indian tribe land in MA. Could come up elsewhere in the future.

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That would be interesting. Not sure how the federal government could even claim jurisdiction as the land transfer happened a long time before the existence of the USA and its Constitution. Reparations, possibly, but repatriation?

Elizabeth Richardson

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